'Break-up looms at Scottish Media'

SCOTTISH Media Group, the company behind Virgin Radio and the Glasgow Herald, has reportedly been told by its banks to break itself up after breaching conditions on its debt. The group later branded the report 'utter nonsense'.

The Business said SMG, caught between plunging ad revenues and soaring debt costs stemming from its spending spree, would split off and sell the broadcasting business.

Chrysalis has been tipped as a buyer for Virgin, the report said. ITV broadcaster Granada, which holds 18% of SMG, has an option to buy SMG's Scottish ITV franchises. SMG's plans for the newspaper business, which also include the loss-making Sunday Herald, are not clear.

SMG's debts are running at £390m, thanks to a string of buys at the top of the market. These included Chris Evans' Ginger Media Group, for which it paid £200m in 2000. It also paid 1500p a share for 30% of rival Scottish Radio Holdings, the deal that pushed it to break its debt conditions. SRH closed at 847 1/2p on Friday.

SMG was due to unveil the break-up with its 2001 figures on Tuesday. A spokesman told the newspaper it would make an announcement on the reshape on 19 March.